The increasing fiscal constraints and concerns about the sustainability of the welfare state for future generations puts pressure on governments worldwide to implement retrenchment measures in...Show moreThe increasing fiscal constraints and concerns about the sustainability of the welfare state for future generations puts pressure on governments worldwide to implement retrenchment measures in social policy according to neoliberal ideas. In the Netherlands, the introduction of the Participation Act on January 1, 2015, drastically decentralized government powers with the dual objectives of delivering effective customization for vulnerable groups of welfare recipients and cost savings. This shift reflects a global trend in which governments reduce the welfare state and focus more on active citizen participation in society. Therefore, the central question that arises is how such significant changes in the social security system, combined with austerity measures, effectively reduce inequality in society. By employing a Difference-in-Differences analysis of data from the Dutch Household Survey (DHS), the effects of the Participation Act on employment and income inequality over the period 2010-2022 is examined. Based on statistically significant results, the hypothesis that over this period, the Participation Act failed to improve both the number of employed individuals and the actual hours worked among the target group compared to the general workforce is rejected. The research identifies a worrisome trend in increased inequalities concerning employment in society. However, the results support the expectation that the Participation Act has not been effective in improving income inequalities for the target group compared to non-welfare recipients. The study also reveals concerning outcomes for the income development of the Participation Act’s target group, which is on the brink of poverty and has no prospect of an improved situation. Thus, it is concluded that the Participation Act has not had a positive effect on reducing employment and income inequality among welfare recipients. Furthermore, recommendations are made for future reforms and further research on the relationship between the welfare state and social inequality.Show less
